Securities and Exchange Commission officials at today's open meeting voted 3-2 to publish for comment amendments to its proxy rules that would enable shareholders to have their director nominees included on corporate proxies and allow them to submit proposals about nomination, procedural, or disclosure matters.

Commissioners Elisse Walter and Luis Aguilar voted along with chairman Mary Schapiro in favor of voting to publish the proposing release, while commissioners Kathleen Casey and Troy Paredes voted against it.

"No less than three times in recent memory has the Commission considered the question of amending our federal proxy rules to address so-called proxy access," Schapiro said at the open meeting. "The time has come to resolve this debate."

Like a failed proposal floated back in 2003, today's recommendation includes a new Rule 14a11. However, unlike the 2003 proposal, the proposed rule doesn't include triggers and instead of a 5 percent ownership threshold and two-year holding period, the staff is recommending a one-year holding period and a tiered ownership threshold of 1, 3, or 5 percent depending on the size of company.

The proposed new Rule 14a11 would apply to all companies that have a class of equity securities subject to Exchange Act proxy rules, including registered investment companies, but it wouldn't apply if shareholders don't have the right to nominate directors under state law or pursuant to provisions of a company's governing documents.

The 1 percent ownership threshold would apply for large accelerated filers and registered investment companies with net assets of $700 million or more, a 3 percent threshold would apply for accelerated filers and registered investment companies with net assets between $75 million and $700 million, and a 5 percent ownership threshold would apply for non-accelerated filers and registered investment companies with net assets of less than $75 million.

While 14a11 won't apply if shareholders don't have nomination rights, as proposed, Brian Breheny, deputy director of the Division of Corporation Finance, noted that the rule would continue to apply even if a company also has a provision in its governing documents that provides shareholders with an alternative mechanism to include shareholder director nominees in the company's proxy materials.

The proposal also recommends an amendment to Exchange Act Rule 14a8, the so-called election exclusion, that would enable shareholders to include proposals in proxy materials that would amend or request amendments to a company's governing documents to address the company's nomination rights or disclosures, or other procedural matters related to those nomination rights, provided the disclosures or provisions do not conflict with the Commission's proposed Rule 14a11.

Back in 2007, the SEC proposed amendments that would've enabled shareholders to include proposals on shareholder director nomination bylaws in the company's proxy materials where certain conditions were met, including a 5 percent ownership threshold, a one-year holding period, and additional disclosures.

Breheny said the only new change if the amendment to 14a8 were to be adopted "would be to allow shareholders to submit proposals about nomination, procedural, or disclosure matters." However, he noted that the changes to 14a8 wouldn't enable a shareholder to include a proposal that would impact the disclosure provisions provided by Rule 14a11.

Unlike 2007, today's proposed amendments don't require any additional conditions. Breheny said the current eligibility provisions of 14a would apply: ownership of at least $2,000 in market value or 1 percent of securities, whichever is less, and a one-year holding period.

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